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Individual Tax

IRS reminds taxpayers that extended individual return Oct. 15 filing deadline is approaching

Thomson Reuters Tax & Accounting  

Thomson Reuters Tax & Accounting  

IR 2018-194, 10/2/2018

IRS has cautioned the approximately 14 million taxpayers who requested an automatic 6-month extension to file their 2017 returns that, for most of them, their filing extension runs out on Oct. 15. IRS also described various payment options available and urged taxpayers to check their withholding.

Background on individuals’ 6-month extension. Individuals can request an automatic 6-month extension to file their tax return by filing Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, by the original due date of the return. (Reg. § 1.6081-4) The form must show the full amount properly estimated as tax for the year, but it needn’t be accompanied by payment of the balance of the tax estimated to be due. (Reg. § 1.6081-4(b)) Failure to include the balance due won’t affect the filing extension, but interest on the balance will still be charged, and a penalty for failure to pay may be imposed. Extensions can’t exceed six months unless the taxpayer is abroad. (Code Sec. 6081(a))

IRS urges individuals to meet the deadline. IRS urged the 14 million taxpayers who requested a 6-month filing extension to double-check their tax returns and file on or before the Oct. 15 deadline.

Some taxpayers have a later deadline. Although Oct. 15 is the last day for most people, some still have more time, including members of the military and others serving in combat zone localities, who typically have until at least 180 days after they leave the combat zone to both file returns and pay any taxes due.

In addition, taxpayers in several disaster area localities who already had valid extensions now have more time to file. Currently, taxpayers in parts of California, North Carolina, South Carolina, and Texas qualify for this relief. However, like other extension filers, these taxpayers were required to pay what they owe by Apr. 18, 2018, which was the filing deadline for 2017 tax returns.

Recordkeeping & AGI. IRS reminded taxpayers that they should keep a copy of their tax returns and supporting documents for at least three years. IRS further noted that changes it made last year to protect taxpayers and authenticate their identity make it more important than ever for taxpayers to have prior-year tax returns available. To authenticate their identities, taxpayers will need to enter either of two items: their prior-year adjusted gross income (AGI) or their prior-year self-select PIN and their date of birth. If married filing jointly, both taxpayers must authenticate their identities with this information.

Extension filers should also plan ahead if they are using a software product for the first time as using an electronic PIN is no longer an option. Those who lack access to their prior-year tax returns can go to irs.gov/transcript and use Get Transcript Online or Get Transcript by Mail to get last year’s AGI.

Check withholding. IRS encouraged taxpayers to complete a “payroll checkup” to determine if a withholding adjustment is necessary, and directed taxpayers to its withholding calculator on IRS’s website to determine whether a new Form W-4 should be completed. IRS noted that it’s helpful for taxpayers to have their complete 2017 tax return available when using the withholding calculator.

Payment options. IRS stated that its Direct Pay option is free and allows individuals to make secure online payments of their tax bills or make quarterly estimated tax payments direct from their checking or savings accounts without any fees or pre-registration. Payment can also be made via debit or credit card, and although IRS doesn’t charge a fee for this service, the payment processor will. IRS also noted the availability of the Electronic Federal Tax Payment System (in which enrollment is required) and Electronic Funds Withdrawal when e-filing. Taxpayers can also pay what they owe using the IRS2Go mobile app, check, or money order

References: For an automatic 6-month extension for filing individual income tax returns, see FTC 2d/FIN ¶ S-5011United States Tax Reporter ¶ 60,814.03.

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